The Department of Justice has served notice that it intends to take aggressive action – and seek billion-dollar recoveries – against banks and residential mortgage lenders on a new front for conduct it alleges amounts to fraud.

Yesterday, the government filed a sprawling, 50-page long complaint in federal court against Deutsche Bank and MortgageIT alleging violations under the federal False Claims Act (and other common law principles), seeking damages and penalties of more than 1.1 billion dollars. In a press conference announcing the lawsuit, the U.S. Attorney for the Southern District of New York strongly indicated that there are similar lawsuits on the horizon against other lenders: “It would not be a fantastical stretch to think we’re looking at other financial institutions as well.”

Please see full alert below for more information.